The sector is leveraged to economic growth and over the weekend, a communiqué and official comments from the Group of 20 meeting came across as "distinctly more cautious on the outlook for global growth," said analysts at Barclays Capital. Read more on currencies.

Overall losses on Monday added to a 1.8% drop on Friday when "the fragile air of calm that had been restored through most of last week was blown away with some force by Friday's disappointing U.S. labor-market report and another bout of panic about the euro zone's institutions," said Ian Williams, strategist at Altium Securities.

Hungary was at the center of that turmoil after a spokesman said that its economy was in a grave state on Friday. However, over the weekend it denied it was on the verge of default, stressing that the nation will keep its budget-deficit goal for 2010, and Mihaly Varga, chief of staff to Prime Minister Viktor Orban said Monday "it is blatant that Hungary is not Greece." Read more on Hungary.

After hitting a four-year low against the dollar on Friday, the euro
EURUSD, -0.4804%
traded at $1.1927, down 0.4%.

The single currency briefly bounced earlier in the session after German manufacturing orders rose 2.8% on a month-on-month basis for April, well ahead of a 0.5% decrease expected by economists polled by Dow Jones Newswires.

In the afternoon Germany announced it will cut welfare benefits, public-sector jobs and introduce new taxes to save as much as 80 billion euros through 2014 in a move it hopes will serve as an example to the rest of Europe.

The German DAX index (1876534) lost 0.6% to 5,904.95, holding up better than the other benchmarks. The French CAC-40 index (PX1) declined 1.2% to 3,413.72 and the U.K.'s FTSE 100 index (UKX) declined 1.1% to 5,069.06.

Deutsche Bank upgraded the German sportswear group to buy from hold, saying a combination of strong operating performance and favorable currency translations should result in higher profit.

Shares of Finmeccanica (FNC) rose 0.2%.

Boeing Co.
BA, +0.44%
said it will submit an entry to build the next generation of U.S. presidential helicopters with AugustaWestland, a unit of Finmeccanica. Last year, the presidential helicopter program was canceled due to cost overruns.

In deals-related action, shares of Grifols (GRF) declined 9.7% after it said that it will buy biotechnology firm Talecris Biotherapeutics
TLCR
for $3.4 billion in cash and stock. Read more on deal.

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